A fool and his money are soon parted...or are they?

Brian Kirby, Head of our Debt Recovery Team, considers whether there is a limitation period for enforcing a money judgment, and reviews recent cases to support the law.

What does the law tell us?

In short, enforcement proceedings are not subject to any limitation period, as a Judgment of the English High Court remains enforceable without a time limit.   However, if there is a delay in enforcing the Judgment, it may affect whether it can be enforced at all, or it may adversely affect the overall sum recoverable.

Section 24(1) of the Limitation Act provides:

“An action shall not be brought upon any Judgment after the expiration of 6 years from the date on which the Judgment became enforceable”.

This is subject to any extension for part payment or otherwise under Part II of the 1980 Act.

Lowsley v Forbes (1998) UK HL34

In this case, the Claimant wished to enforce a Judgement 11 ½ years later, when the Defendant returned to the country.

The House of Lords considered the wording of Section 24(1) above in the context of enforcing by Charging Order and Garnishee proceedings (now Third Party Debt Orders).  In their Lordships opinion, “action” meant a fresh action and did not include proceedings by way of execution.   Execution has been held to mean the process for enforcing or giving effect to a Judgment of the Court.   The process is “completed” when the Judgment creditor gets the money or other thing awarded to him by the Judgment.

The Lords ruled that the legislation barred the bringing of a fresh action, but that execution of the existing Judgment did not count as a fresh action.   Therefore the Claimant was able to take enforcement action.  However, the Lords did rule that the time limit of 6 years interest did still apply.

This is in accordance with the Courts attitude to enforcement generally, as set out in case law.   The starting presumption is that the Court should assist the Judgment creditor to recover the debt due to it by all or any of the enforcement methods prescribed by the Court Rules.

Yorkshire Bank Finance Limited v Mulhall & Another (2008) EWCA CIV1156

In this case, more than 12 years had passed since the Order was made.  Despite this delay, it was found that there was no provision in the Limitation Act that affected the enforcement of a Charging Order.

The Court came to this conclusion on the basis that an application to enforce a Charging Order was not an Application to enforce the Judgment, but to enforce the Charging Order, which had “a life of its own”.   In reaching its decision, as well as considering Section 24, the Court also considered Section 20(1) of the Limitation Act, which provides that:

No action shall be brought to recover:

(a) Any principal sum of monies secured by a mortgage or other Charge on property (whether real or personal), or

(b) Proceeds of the sale of land, after the expiration of 12 years from the date on which the right to receive the money accrued.

Impact of Delays

The main impact of a long delay in enforcement will be whether the Judgment debtor can be located, has sufficient assets and is solvent.   In the case of a business, it may have been wound up or gone into insolvency.   There will also be the fact that only 6 years interest can be recovered.

Permission will be required from the Court to obtain a Writ of Execution on a Judgment more than 6 years old under RSC Order 46, Rule 2(1)(a).  The Court is likely to ask why there has been such a delay and will take this into account when making its decision.

The Judgment debtor may also challenge enforcement on the basis of delay.  However he will have to provide compelling evidence of the extent of prejudice to the debtor by reason of the delay.

What should we learn from these cases?

There are cases where a Judgment previously considered unenforceable because, for example, the creditor can not be found or is impecunious,  becomes viable, and can then be enforced more than  6 years after the original judgement.  In most circumstances, however, we would strongly advise that you take enforcement action as soon as it becomes available, to increase the chances of success.

If you require help with enforcing a Judgment, then contact Brian on 02380 717421 or email briankirby@warnergoodman.co.uk, and he will gladly assist you in the recovery process.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.